G20

G20 country governments are providing $452 billion a year in subsidies for the production of fossil fuels. Their continued support for fossil fuel production marries bad economics with potentially disastrous consequences for the climate. In effect, governments are propping up the production of oil, gas and coal, most of which can never be used if the world is to avoid dangerous climate change. It is tantamount to G20 governments allowing fossil fuel producers to undermine national climate commitments, while paying them for the privilege.

Governments across the G20 countries are estimated to be spending $88 billion every year subsidising exploration for fossil fuels. Their exploration subsidies marry bad economics with potentially disastrous consequences for climate change. In effect, governments are propping up the development of oil, gas and coal reserves that cannot be exploited if the world is to avoid dangerous climate change.

Useful overview of ways the existing United Nations Framework Convention on Climate Change (UNFCCC) could be leveraged to expand transparency and reform of fossil fuel subsidies. Because there are a number of potential venues already extant under the UNFCCC that could be used, the chance to overcome political resistence may be higher than through some other venues. The author anticipates that developing countries implementing subsidy reforms as Nationally Appropriate Mitigation Actions may be particularly promising.

In advance of the G20 meeting in Los Gatos, Mexico this past June, Earth Track and Oil Change International did a detailed review of how the member countries were doing in meeting their 2009 commitments to phase out inefficient fossil fuel subsidies. The resulting report, Phasing Out Fossil-Fuel Subsidies in the G20: A Progress Update, summarizes the limited progress that has been made to date. Our initial report, released in 2010, can be found

In this, our second review of progress in meeting this phase out commitment (an earlier review was published in November 2010), we reviewed formal submittals by member countries to the G20 and the WTO, reached out individually to staff from each member country, and reviewed third-party assessments of fossil fuel subsidies. We conclude that the G20 effort is currently failing. The following factors are the key reasons for this failure.

...Moreover, citizens and companies that rely on fossil fuels usually do not pay the full cost of resulting environmental problems like oil spills, sludge from coal mines and greenhouse gases, and for health problems from polluted air.

Estimates of the cost of these effects — or “externalities” in the ungainly jargon of economists — vary.

One of the striking findings in the review of subsidy reporting to the G20 that Earth Track and Oil Change International published a few months back was how little subsidy information the countries actually made public. This information holdback is clearly detrimental to meeting the commitment all of the member nations made to phase out fossil fuel subsidies, understandable though it may be from a geopolitical, strategic perspective. As noted in the re

This is the second detailed report on fossil fuel subsidies prepared by the assigned agencies to support the G20 subsidy phase-out commitment. It was prepared to support the November 2010 meeting of the G20 in South Korea. The report estimates the scope of fossil-fuel subsidies in 2009 and provides a roadmap for phasing-out fossil-fuel subsidies. The IEA estimates that direct subsidies that encourage wasteful consumption by artificially lowering end-user prices for fossil fuels amounted to $312 billion in 2009. In addition, a number of mechanisms can be identified, also in advanced econ